Summary: The Supreme Court has addressed a long-standing issue in arbitration law, holding that the receipt of the arbitration notice marks the commencement of arbitral proceedings for the purposes of limitation period, interim reliefs, and procedural laws.
Introduction
The Supreme Court,[1] in its recent decision in Regenta Hotels Pvt. Ltd. v. Hotel Grand Centre Point & Ors,[2]answered a recurring question in the space of Indian arbitration: When does an arbitration actually commence – at the stage of appointment of an arbitrator, when a court is approached for appointment under Section 11 of the Arbitration and Conciliation Act 1996 (“Act”), or when a party formally invokes the arbitration clause?
The Court decisively held that the trigger for arbitral proceedings to commence is the date the respondent receives a notice invoking arbitration, in accordance with Section 21 of the Act.
Although the Court’s ruling broadly reaffirms the statutory position under Section 21 of the Act, it has far-reaching consequences on the period of limitation, interim relief, and the overall strategy in commercial litigation.
Brief Facts
The dispute arose from a franchise agreement between Regenta Hotels Pvt. Ltd. (“Appellant”) and a partnership firm operating a hotel in Srinagar, M/s Hotel Grand Centre Point (“Respondent”). Due to business differences over the hotel’s operations, the Appellant sought various injunctive reliefs against Respondent No. 2 (a partner of Respondent No. 1 firm), which the trail court granted vide order dated February 17, 2024.
On April 11, 2024, the Appellant issued an arbitration notice to the Respondents, under Clause 19.1 of the Franchise Agreement. As the parties failed to mutually appoint an arbitrator, the Appellant filed a petition under Section 11 before the High Court of Karnataka (“HC”), seeking appointment of a sole arbitrator.
However, both the trial court and the HC vacated the interim protection granted to the Appellant. The HC held that Section 9(2) of the Act read with Rule 9(4) of the Arbitration (Proceedings Before the Courts) Rules, 2001 (“2001 Rules”), mandate that arbitral proceedings commence within 90 days of the interim order, failing which interim relief stands vacated automatically. It also reiterated that arbitral proceedings commence only when the Respondent receives a request for reference to arbitration and mere issuance of notice does not constitute such commencement.
Aggrieved, the Appellant approached the Supreme Court (“SC”), arguing that arbitration had already commenced upon service of the notice invoking arbitration and that the interim relief could not be vacated because of a misinterpretation of Section 21 of the Act.
Court’s Decision and Analysis
Allowing the appeal, the SC held that, “The settled position as emerged is that the commencement of arbitral proceedings is a statutory event defined exclusively under Section 21 of the Act, wherein the respondent’s receipt of a request to refer the dispute to arbitration sets the arbitral proceedings in motion and no judicial application, i.e., whether under Section 9 or Section 11 petition, constitutes commencement. Therefore, the statutory consequences tied to commencement, including the mandate under Section 9(2) of the Act, must be assessed solely with reference to the date of receipt of request invoking arbitration under Section 21 of the Act.”[3]
Rule 9(4) of the 2001 Rules provides the consequences of non-compliance with the mandate of commencing arbitral proceedings within 90 days. It states that where the interim order has been granted but arbitral proceedings are not initiated within three months from the date of presentation of the application, the interim order shall stand vacated automatically. Furthermore, the SC clarified that, “Consequently, for the purposes of Rule 9(4), the expression “initiated” has necessarily to be read as “commenced” within the meaning of Section 21 of the Act.”[4]
The rationale for starting arbitral proceedings within 90 days of interim protection is to prevent misuse of Section 9 of the Act to obtain interim reliefs without submitting to the arbitral forum. Any other interpretation would effectively allow courts to rewrite Section 21 sub silentio.
Furthermore, the SC noted that if commencement of arbitral proceedings were to be construed from the Section 11 stage, it would constrain parties to mandatorily file Section 11 proceedings to prevent lapse of interim measures, even when they had mutually agreed on the appointment of an arbitrator or had recently been served a Section 21 notice.
Key Takeaways and Impact on the Legal Landscape
The SC’s ruling promotes uniformity by eliminating uncertainties surrounding the commencement of arbitration across disputes. Parties have exploited frequently used loopholes, such as disputing appointment mechanisms, to delay arbitration. However, they can no longer do this, with the SC ruling that arbitration commences upon the receipt of the arbitration notice.
The SC seeks to uphold predictability in India’s arbitration process and, in doing so, aligns court involvement under Section 11 of the Act with its intended remedial function. This ruling substantially reduces litigation including on procedural aspects, reinforcing the intention to have an efficient and timebound arbitration process in India. This predictability strengthens commercial certainty, and boosts confidence in the Indian arbitration system, and reduces litigation costs and time.
Any potential dispute regarding limitation is now effectively addressed, with greater clarity on the date of commencement of arbitration for computing limitation. As stated in State of Goa v. Praveen Enterprises (2012) 12 SCC 581, “…. Sub-section (2) of Section 43 provides that for the purposes of Section 43 and the Limitation Act, 1963, an arbitration shall be deemed to have commenced on the date referred to in Section 21 of the Act. Having regard to Section 43 of the Act, any claim made beyond the period of limitation prescribed by the Limitation Act, 1963, will be barred by limitation and the arbitral tribunal will have to reject such claims as barred by limitation.”[5]
This is particularly important for computing the date of commencement of arbitration for the purposes of Section 9(2) of the Act, which empowers courts to grant interim orders, provided that arbitration proceedings commence within 90 days of the interim order. Once a valid notice of arbitration is served within this period, the arbitral proceedings are deemed to have commenced, ensuring the interim relief continues to subsist rather than vacate automatically.
Although Section 21 of the Act is not relevant for counterclaims, even for counterclaims in arbitral proceedings, the date of “institution” is the date on which the counterclaim is filed before the arbitrator. However, an exception to this rule arises where the respondent against whom a claim is made, had also made a claim against the claimant and sought arbitration by serving a notice to the claimant but subsequently raises that claim as a counterclaim in the arbitration proceedings initiated by the claimant, instead of filing a separate application under Section 11 of the Act, the limitation for such counterclaim should be computed, as on the date of service of notice of such claim on the claimant and not on the date of filing of the counterclaim.[6]
Conclusion
The SC’s decision is a significant step towards efficient, certain, predictable adjudication through the arbitration process. This decision will serve as a reference point for courts, practitioners, and businesses, because it not only erases procedural ambiguities and loopholes but also focuses on efficiency, certainty, and commercial practicality over technical formalism. By recognising notice of arbitration as the point of commencement, as is the practice internationally, the ruling aligns Indian arbitration jurisprudence with the global regime. This enhances India’s credibility as an emerging commercial hub, strengthens foreign investor confidence, and facilitates cross-border dispute resolution.
[1] Division Bench comprising Justices Dipankar Datta and Augustine George Masih
[2] Regenta Hotels (P) Ltd. v. Hotel Grand Centre Point, 2026 SCC OnLine SC 35
[3] Regenta Hotels (P) Ltd. v. Hotel Grand Centre Point, 2026 SCC OnLine SC 35, Para 23
[4] Regenta Hotels (P) Ltd. v. Hotel Grand Centre Point, 2026 SCC OnLine SC 35, Para 27
[5] State of Goa v. Praveen Enterprises (2012) 12 SCC 581, Para 16
[6] Voltas Ltd. v. Rolta India Ltd., (2014) 4 SCC 516, Para 23